Budget 2012: Challenge is to get growth back to 8%,says PM

'We have to bite the bullet,' Singh says on Budget proposals to reduce,control subsidies.

Written by Agencies | New Delhi | Published: March 16, 2012 2:01 pm

India will require to adjust prices of petroleum products to bring down subsidies,Prime Minister Manmohan Singh said in an interview to the state broadcaster on Friday after his government presented the Union Budget for 2012-13 to Parliament.

”We have to bite the bullet,” the Prime Minister said on proposals for reduction and control of subsidies in the Budget

”When it comes to taking tough decisions,we will consult all allies,” he said.

Singh said protecting the growth rate,which is better than most countries,is the biggest achievement. ”The challenge is to get the growth rate back to 8 per cent.”

Singh also said the growth rate of the economy is a major achievement in the past three years.

”The government is committed to ensuring faster,sustainable and equitable growth,that is the challenge,” he said.

After stiff opposition by ally Trinamool Congress to retail FDI and rail fare hike,Singh said the government would consult allies and take them on board whenever “tough” decisions are to be taken.

In his reaction to the Union Budget presented in Parliament,he acknowledged that coalition “compulsions” would pose difficulties but made it clear the government was committed to ensuring faster,sustainable and equitable growth at the rate of 8-9 per cent.

When asked in an interview to Doordarshan,whether allies like Mamata Banerjee were on board in the government’s reforms process,Singh said,”I think these are compulsions of managing the coalition.

“There will be difficulties. There have been difficulties but ultimately if the government is to govern,it must have a sustainable strategy of managing the economy. I sincerely hope when the time comes to take relevant decisions which are tough,we will consult all our allies and take them on board.”

The statement assumes significance as it comes against the backdrop of stiff opposition by major UPA constituent Trinamool Congress to reform measures like allowing FDI in retail and raising railway passenger fares.

In view of Trinamool’s opposition,the proposal to allow 51 per cent FDI in multi-brand retail has been put on hold.

In his budget speech,Finance Minister Pranab Mukherjee said the government plans to keep 2012-13 subsidies under 2 per cent of GDP,and under 1.7 per cent of GDP in the next three years.

Petroleum subsidy bill for the next fiscal year that begins on April 1 is seen at 435.8 billion rupees.

The Prime Minister said it was the “the biggest achievement” of the government that the growth rate of the Indian economy had been protected despite the problems witnessed in rest of the world.

“We are still in the league of front runners in the growth movement,” he said.

Singh pointed out that amidst the global financial crisis,the country’s economic growth fell to 6.5 per cent in 2008-09. The growth returned to 8.4 per cent in 2010-11 but again slipped last year,he said.

“The challenge is to get it back on the path of 8-9 per cent and that’s the task that this government has set for itself,” he said.

Singh said the budget was an important instrument of macro economic policy and faster equitable,sustainable and more inclusive growth.

“We have,I think begun well and made use of modern technological devices to cut out wastage and leakages in the delivery mechanism in various public sector services,” he said.

When pointed out that nutrient-based subsidies had been extended to phosphates and potassium and not urea which created huge demand in Rabi season,Singh said,”There is a general agreement that we should have a rethink on subsidy for all the three.

“But,it is deliberately felt that the time when international prices of urea were increasing,it would,I think,be wise to go slowly towards the nutrient-based subsidies and decontrolling urea as well. So I think it is a question of timing,” he said.

At the same time,the Prime Minister said,”But there are,I think,compulsions which require that the government will have to take sensible decisions which may not be very popular.”

Singh said Finance Minister Pranab Mukherjee has pointed to the need of controlling fuel subsidies and bringing down the subsidies to less than 1.7 per cent in the next three years.

“That is obviously the task which,I think,has required the government to put forward an effective programme for adjusting the prices of petroleum products and adjusting other relevant prices.

“So we have to bite the bullet. There is no other way in which you can reduce subsidies,” the Prime Minister said.

When referred to the controversies surrounding ADHAAR scheme,he said,”There may be controversies and there are controversies in these sort of things all over the world but we have,I think,begun and we will use the modern technological devices to cut out leakages in delivery mechanism of various public sectors.”

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